The Japanese, it seems, are having problems sorting out how to justify investment in a new small airliner. So are the Koreans and the Chinese, and others, much to the bemusement of at least one potential Western partner for some or all of them. At the same time, the Indonesians are thinking the previously unthinkable and looking for external funding for what, up until now, has been an industry built with local funding on the back of local demand. What has gone wrong with Eastern aspirations?
Quite simply, what has gone wrong is that US and European manufacturers have done something which classically educated management gurus would never have suspected. They have taken so much out of the manufacturing cost of a new airliner that the emerging aerospace nations may not be able to afford to compete with them, especially since hitherto-buoyant markets have taken a beating.
It is not that those nations do not have in-built advantages. No matter by how much the Western manufacturers automate and simplify the production process, they still cannot match the labour costs of their Asian competitors. Thus, even Boeing concedes that, if it is to really get cost out of its proposed 100-seater it will need to rely on low-priced Asian labour for much of its manufacture.
The Asians who would prefer to go it alone (or in a totally Asian partnership) have another problem, however. They have no existing programmes from which they could extrapolate cheap derivatives, as Boeing can with its 737, Fokker with its 100 and McDonnell Douglas with its MD-80. Yes, they can buy the same engines as their Western counterparts do, and the same avionics, but they would face massive non-recurring costs in design and development before they could make a single aircraft.
As Boeing et al have made clear, it would cost in today's money anything up to $3 billion to develop a brand-new small airliner. The target, which Boeing has set for its New Small Aircraft (NSA) project, is under $1 billion and for that, it says, the NSA has to be a derivative aircraft.
Designing, developing and manufacturing an airliner is, of course, only dealing with the first part of its total-life costs. Its operating life will be spent in consuming fuel, spare parts and back-up services. Any serious manufacturer, which aspires to break into world markets with a new product, will face massive expenditure in setting up those back-up systems. It must do so in the full knowledge that, to an airline, an aircraft on the ground is an aircraft on the ground, no matter how cheap or expensive it was to buy. Any aspirant manufacturer must also set up a credible marketing and sales organisation and - vital for the sort of market being addressed - provide a (probably expensive) financing/leasing system, as Western companies must do.
The aspirant to this market must do all this against a background of consolidations by the already extant manufacturers which, despite all the expertise, experience and market presence which they have managed to build up over the years, now find it impossible to contemplate new solo launches in this field.
As the 1995 air-show season advances, many more projects - involving ever-more complicated teamings of manufacturers - will surface for their days of speculative glory. The chances of any of them reaching fruition, however, will not be anywhere near as bright as the spotlights illuminating their air-show models. The reality is probably that any one of those aspirants would be better off investing in an existing Western programme than in trying to re-invent one for itself.
Source: Flight International
